Reading The Four Pillars of Governance Best Practice from the Institute of Directors, it was great to see a chapter devoted to ethics.
It is increasingly a major factor in the sustainability of any business and something that needs to be taken seriously. It doesn’t matter how big your organisation is, if it forgets its values and ethics, there will be negative consequences.
To quote The Four Pillars…
“Unethical behaviours ultimately damages the companies and their personnel. Lost customers, employees and sales, and the loss of a hard won reputation can take years to rebuild. Some companies never recover.
Conversely, running a company with consistent integrity and high ethical values is simply good business. Such companies attract the best people, the most sought after customer and supplier relationships and investment opportunities. Goodwill, consistent good reputation and attraction of potential staff are all outcomes of ethical behaviour. An ethical culture can also contribute to improving employee engagement and commitment.”
Ethical behaviour is everyone’s responsibility but it has to be led from the top. If directors, owners or CEO’s cut corners or drop their standards, then other staff will follow suit.
In the real world, it may not always be black and white. With some issues, ethics may appear to be subjective or it may not be obvious that a course of action could be seen as unethical. It’s easy to start with the question “what is the right thing to do?” but again it’s not always clear cut.
Big companies with professional boards will often have an ethics committee. A team of directors who set the criteria and standards for ethical behaviour in the company. This is not just a very grand approach, it does set the scene displaying that it’s an issue that is taken seriously and is being addressed at the highest level. Of course, even with such committees in place, actions speak louder than words.
But what of the SME?
Most businesses in New Zealand simply aren’t going to have an ethics committee at a governance level. Guidelines, policies, criteria etc are not going to be documented and there won’t be any sort of audit.
As always, it comes down to you – the busy business owner, CEO or GM. You have to model the behaviours and hold others to account. You are responsible for ensuring that your business is seen as ethical and values-led. Just another thing in your never completed job description.
In most situations, most people will automatically do the right thing. It won’t even be contestable.
Where you’re unsure, or it’s not obvious then the best option is to ask. Explicitly test your thinking on the ethical issue. Peers, staff and especially a trusted external advisor are all great for sense checking. Don’t shy away from these conversations because your reputation is too important to gamble with.
And if in doubt, seek out a sounding board.
The Optimistic Cynic 